Teams in Organisations: Oticon

When we leave university and step out into the workplace, the majority of us believe ourselves to be prepared to work with others in teams to meet specified goals or objectives. Teams are the norm now, though it was not the case decades ago when traditional hierarchical structures were perceived to be the most efficient and effective.

I have chosen to share with the class the case of Oticon, a Danish hearing aid technology company that once dominated the market in the 1970s but found itself lagging behind its competitors from the 1980s onwards. In the early 1990s, its CEO, Lars Kolind decided to implement drastic changes to the company to turn its performance around.

oticon

Kolind introduced a project-oriented organisation structure, where employees worked in self-formed, cross-functional teams. This later resulted in what became known as a “spaghetti organization”.

What image does the plate of spaghetti invoke?

 spag

Complex, informal, flexible “spaghetti organization”

Oticon experienced great success with the project teams and managed to outperform its big name competitors such as Siemens and 3M as it was able to bring innovative, high-quality products to the market at a much faster rate.

team

I will use the Team Effectiveness Model that was introduced in class to analyse what factors could have contributed to the effectiveness of the teams, and ultimately Oticon’s success in the early 90s. I have organised the information obtained from the various research in the table below.

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Conclusion

From the Oticon case, we are able to pick out what the company managed to do well in order to create effective teams that drive innovation and creativity. Some of the measures implemented can in fact serve as learning points to other companies that are looking to establish creative teams.

However, there remains some setbacks.

I have surmised that Oticon would have to resolve several issues in order to develop a project-based “spaghetti” organization that is sustainable in the long term:

  1. How will employees progress in the company in terms of career development given the rather flat structure?
  2. Will employees lose their functional “mastery” due to the multi-disciplinary focus? Is this necessarily a bad thing?
  3. How will the management control workplace politics? Is it possible that employees might only wish to work in teams with select individuals, depriving others of opportunities to work on “good” projects?

I feel that these are questions Oticon really needs to address if it hopes to maintain effective teams as part of its organizational structure. Do share your thoughts if you have an answer/ opinion with regard to the questions posed above. 🙂

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References:

Kolind, L. 2006. ‘The Second Cycle: Winning the war against bureaucracy’. Wharton School Publishing

Foss, N. J. 2003. ‘Selective intervention and internal hybrids: Interpreting and learning from the rise and decline of the Oticon spaghetti organization’. Organization Science 14: 331-349.

New Frontiers. “Rethinking Management’s First Principles.” <http://www.managementlab.org/files/u2/pdf/case%20studies/OticonCaseStudy_.pdf>.

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